Week in Review: Municipalities and the Housing Crisis of 2025

This week, the CDU's Economic Council in Hesse held an in-depth discussion on the housing crisis. While Frankfurt is home to the European Central Bank, the most significant monetary authority in Europe, many Hessian municipalities are struggling with empty coffers and insufficient funds to stimulate residential construction. Municipal budget expenditures are rising, and state allocations are being reduced.

Demographic developments are intensifying the situation. Old-age poverty is increasing and affects women disproportionately. For many municipalities, this means rising expenditures while revenue margins continue to shrink.

Bureaucratic hurdles and lengthy approval procedures are slowing down numerous projects. Even investors willing to build face structural obstacles that delay urgently needed housing.

The fiscal framework must remain a key issue. Depreciation rules require further improvement, and incentives for the redevelopment of existing buildings appear sensible. A reduction in real estate transfer tax would provide an additional lever to make private investments more attractive and facilitate the implementation of new housing projects.

High energy and heating costs continue to burden ancillary expenses and increase overall rents. This affects private households and municipalities alike.

This makes it all the more important for municipalities to actively seek closer cooperation with private capital willing to invest in housing. Without private investors, the bottlenecks of the coming years cannot be overcome.

Ronny Kazyska